The recent power outage that shut down Heathrow Airport for a day in March has cost British Airways around £40 million. The airline described this as an “optional evaluation,” indicating they don’t anticipate compensation from Heathrow.
There was significant frustration from BA regarding the response to the outage and the subsequent recovery time. This incident occurred after a fire broke out at a substation. National Energy System operators reported that it took Heathrow seven hours to resume operations after power was restored, with very few flights able to take off.
BA’s CEO, Sean Doyle, pointed out that there is no automatic recovery process from insurance companies or Heathrow for such incidents.
Doyle stated, “We clearly value options, but under current regulations, we can’t rely on them right away.”
A review of the situation at Heathrow, led by non-executive director Ruth Kelly, is set to take place later this month.
Despite the blackout’s financial burden, BA’s parent company, International Airlines Group (IAG), reported a 9.6% revenue rise in the first quarter, reaching 7 billion euros (£5.9 billion), with an operating profit increase to 108 million euros.
The IAG also announced a deal worth $13 billion (£9.8 billion) to purchase 32 new planes from Boeing, coinciding with a recent trade agreement with the US that reduced tariffs in the sector.
In addition, IAG disclosed an $8 billion agreement for 21 Airbus aircraft. This news followed the US decision to eliminate tariffs on Rolls-Royce jet engines for both Boeing and Airbus products, prompting a nearly 4% rise in the company’s shares during trading on Thursday.
IAG CEO Lewis Gallego expressed appreciation for the tariff exemption but remarked that the aircraft trade and the timing of the broader trade agreement were merely coincidental.
Gallego mentioned, “The UK government and Boeing were aware that we were involved in this bidding process. Generally, we believe tariffs are not beneficial for our business development.”
IAG’s Chief Financial Officer, Nicholas Cadbury, added more insights on the situation.
The Boeing jets IAG ordered will utilize General Electric engines from the US. Therefore, even if the UK-US trade agreement hadn’t occurred, the contract wouldn’t have been impacted by the new tariffs imposed by Trump. In contrast, Airbus aircraft rely on Rolls-Royce engines.
U.S. Secretary of Commerce Howard Lutnick indicated that an unspecified British company would be acquiring a Boeing aircraft valued at $1 billion.
According to IAG, each Boeing plane has a list price of about $397 million, which gives the contract a theoretical worth of approximately $12.8 billion. Airbus planes are priced at around $374 million each. However, IAG mentioned they secured a “substantial discount” on each deal.
Gallego noted, “This order represents a significant step in our strategy and transformation efforts, underscoring our commitment to strengthening our brand and enhancing customer offerings.”
Separately, IAG mentioned that they have observed “recent softness” in economy ticket sales among US travelers. Nevertheless, premium class tickets, such as Business Class, remain strong, thereby minimizing the overall impact.
Gallego stated, “We continue to observe robust demand for air travel across all regions, especially given the volatility in premium cabins and broader economic conditions.”
Aarin Chiekrie, an analyst at Hargreaves Lansdown, remarked, “While tariffs have influenced the travel sector, with 80% of second-quarter flights already booked, the outlook is more optimistic than many expected.”
